SK Corp cuts crude runs as margins weaken

SK Corp, South Korea's top oil refiner, has cut its crude runs for November and December by as much as 4 percent on weakening refining margins, an SK source said yesterday, a move that mirrors cuts by Japanese rivals.

Pressured by unseasonably warm weather in the northern hemisphere and weaker consumer demand in much of Southeast Asia, margins for simple, export-oriented refiners in Singapore a proxy for the regional as a whole slipped to $1 a barrel this week, sharply down from nearly $5 a barrel in October.

SK's crude runs for this month and December would now stand at 770,000-780,000 barrels per day (bpd), down from an earlier 800,000 bpd, the source said.

SK might maintain that rate in January, the source said. "Margins of $1 a barrel may still look okay for now, but they have fallen so fast," said the SK source.

"Once the margins collapse, we cannot do anything. So we have to cut the rates as a precaution before it's too late."